Tapping the power of biofuels

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Though it has been virtually unavailable this winter, “bioheating” oil – a blend of diesel and oil refined from vegetable oil, recycled cooking grease or animal fats – is expected to be available later this year as an alternative heating fuel for Rhode Island homes.
The first biofuel wholesaler in the state is expected to begin operations this summer, when Hudson Ecofuel, a subsidiary of Providence-based Hudson Cos., reactivates an old terminal with 10 million gallons of capacity in the Port of Providence as a blending rack for bioheating oil, biodiesel and ultra-low-sulfur diesel fuel.
“We’re getting very close,” said Robert Cerio, Hudson’s energy resource manager.
The company, which operates an asphalt plant nearby, plans to buy pure biofuel derived from soybeans from an out-of-state manufacturer and blend it to produce oils ranging from B-2 to B-20 – meaning blends with biofuel content ranging from 2 percent to 20 percent, Cerio said.
Eventually, Hudson might decide to build its own biofuel factory at the same site, he said.
Two other manufacturers currently working to get biofuel plants up and running in Rhode Island could be online by the fall, said Andrew Dzykewicz, the governor’s chief energy adviser. Gerald Diodati, a developer and construction contractor in Johnston, and R. Philip Mason, owner of Westerly-based Mason Biodiesel, are both working to begin production of biofuel before the next heating season, Dzykewicz said.
Introduction of biofuel into the Rhode Island market is expected to step up once Hudson or another wholesaler begins operations in the state, said Larry Chretien, executive director of People’s Power and Light, the Providence-based nonprofit energy company that recently merged with the Massachusetts Energy Consumers Alliance.
Bioheating oil is already more widely available to consumers in neighboring Massachusetts and in several other Northeast states, but it has been slower to enter the Rhode Island market, in part because retail oil dealers have to travel north of Boston or down to New Haven to purchase the oil, Chretien said.
Two wholesale distributors of biofuel – Portsmouth, N.H.-based Sprague Energy and Chelsea, Mass.-based World Energy Alternatives – have begun a strong push to offer biofuel throughout New England, Chretien said.
So far, Sprague Energy has set up shop in states that are subsidizing the biofuel industry. The company built blending racks in Albany, Long Island and the Bronx after New York mandated the use of biofuel in state facilities and vehicles and established tax breaks for bioheating oil.
The company also operates a blending rack in Maine, another state that has committed to using biodiesel in state-owned buildings and vehicles.
“You know, there’s a fairly significant outlay of capital to switch over, either by building new tanks or switching over the old tanks to house the biofuel,” said Andy Lynch, Sprague’s manager of marketing and communications. “We are looking in Rhode Island. We’d love to just wave a wand and have all of our systems up and running overnight. Unfortunately, it’s just not that easy.”
Because bioheating oil generally costs more than standard heating oil, entering a new market poses a chicken-and-egg scenario for wholesalers and retail oil dealers, Lynch said.
“It’s a matter of convincing the retailers there’s enough interest out there,” he said. “The dealer’s saying, ‘Well, I’m not going to get into it if it’s a price difference and my customer’s not going to pay.’ And we tell them, ‘If you get it, your customers will buy it.’ ”
Tax incentives can bring down the cost of bioheating oil – which typically costs only slightly more than standard heating oil – to the extent that retail dealers are willing to carry the oil, and consumers are willing to buy it, Lynch said.
“With crude pricing increasing again, there is more parity in the market, especially with a tax credit or user-end credit they can work into the pricing,” he said. “Instead of [bioheating oil costing] 7 to 10 cents a gallon higher, now it’s only pennies higher, and many more are willing to say, ‘I want to make a difference in my home for $60 bucks a year.’ ”
A small handful of oil dealers already sold on bioheating oil’s potential are already offering it to their customers in Rhode Island, including Westerly-based Guardian Fuel & Energy Systems Inc., which began selling a B-5 heating oil blend in November.
Randy Lohr, who owns the company with his wife, Jamie, said they waited several years until bioheating oil became locally available – his trucks travel to New Haven to purchase the biofuel.
Because wholesale prices have been lower in New Haven than elsewhere, Guardian is actually offering bioheating oil at the same price as traditional heating oil, Lohr said.
“It costs us a little bit more transportation wise, but it’s an important thing to bring to our customers,” he said. “This is probably one of the most exciting things that’s happened in the heating oil business in years.”

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